The desired outcome of the mediation process is to create a Marital Settlement Agreement (MSA) and Parenting Plan – if you have minor children. These documents will be presented to the court and included in the final judgment dissolving your marriage. After you are divorced, your MSA and Parenting Plan will serve as written guides for how you will divide money and parenting tasks.
Typically, five specific topics are discussed during divorce mediation and then incorporated into the MSA and Parenting Plan. These topics are often presented and explained using the acronym P.E.A.C.E.: Parenting, Equitable Distribution, Alimony, Child Support, and Everything Else. The Parenting Plan is discussed HERE and HERE. This article is focused on the Equitable Distribution, Alimony, Child Support, and Everything Else sections of your Marital Settlement Agreement.
Equitable distribution is the fair, but not necessarily equal, division of all marital property, assets, and debts. This complex concept is discussed in Section 61.075 of the Florida Statutes.
Typically, one spouse is more knowledgeable about family finances. If you are the spouse that is less informed, now is your chance to get caught up – fast. In order to negotiate and participate meaningfully in the mediation process both spouses should be aware of what was owned and owed prior to the marriage, what has been acquired since the marriage, and what is currently owned and owed.
You and your spouse will decide how to divide or distribute all of your assets and debts so that you can achieve a financial divorce. Your assets are your home, retirement accounts, bank accounts, investment accounts, possessions, businesses, insurance policies, cars, etc. Your liabilities will include debts – such as your student loans, credit card debts, car loans, mortgage debt, etc. If you and your spouse do not agree on how to divide your assets and debts the Judge will do this for you based on the criteria in 61.075.
Alimony is money or other property paid in fulfillment of a duty to support one’s spouse after a separation or divorce. If a divorcing couple does not agree to an alimony plan, a judge may order alimony. There are many factors to consider when deciding the question of alimony but the key factor will be the receiver’s need and the payor’s ability to pay.
Section 61.08 of the Florida Statutes (a) allows for an award of more than one type of alimony; (b) classifies short-term (up to 7 years), moderate-term (7 to 17 years), and long-term marriages (over 17 years), and (c) describes the factors a judge should consider in awarding alimony. These factors include:
(a) The standard of living established during the marriage.
(b) The duration of the marriage.
(c) The age and the physical and emotional condition of each party.
(d) The financial resources of each party, including the non-marital and the marital assets and liabilities distributed to each.
(e) The earning capacities, educational levels, vocational skills, and employability of the parties and, when applicable, the time necessary for either party to acquire sufficient education or training to enable such party to find appropriate employment.
(f) The contribution of each party to the marriage – including services rendered in homemaking, child care, education, and career building of the other party.
(g) The responsibilities each party will have with regard to any minor children they have in common.
(h) The tax treatment and consequences to both parties of any alimony award.
(i) All sources of income available to either party, including income available to either party through investments.
(j) Any other factor necessary to do equity and justice between the parties.
Once alimony has been ordered, it may (or may not) be modifiable later on. When discussing alimony, divorcing couples should discuss whether or not this alimony will be modifiable as to the duration (length of time) and/or as to the amount, and what circumstances would warrant a modification.
Commonly, there are six forms of alimony; however, a couple can create an alimony arrangement that does not fit any of these specifics.
- Temporary Alimony is used during the process of divorce so that the receiving spouse can pay his/her expenses until the final dissolution.
- Rehabilitative Alimony is used during a specific time period so that the receiving spouse can obtain training, education, or job skills and so become self-supporting. Rehabilitative alimony may be awarded so that the receiving spouse can establish the capacity for self-support through either the redevelopment of previous skills or credentials; or the acquisition of education, training, or work experience necessary to develop appropriate employment skills or credentials. Before a judge awards rehabilitative alimony there must be a specific and defined rehabilitative plan. An award of rehabilitative alimony may be modified or terminated upon a substantial change in circumstances, noncompliance with the rehabilitative plan, or completion of the rehabilitative plan.
- Bridge-the-Gap Alimony is used for a limited period in order to assist the receiving spouse with legitimate, identifiable short term needs as s/he makes the transition from being married to being single. (For instance a 63 year old woman who will be eligible for Medicare when she turns 65 may need bridge-the-gap alimony to pay her health insurance premiums during the next two years.) An award of bridge-the-gap alimony terminates upon the death of either party or upon the remarriage of the party receiving alimony, is non-modifiable as to both the amount and duration, and may not exceed 2 years.
- Permanent Periodic Alimony is used to provide for the needs and necessities of life as they were established during the marriage for the spouse who lacks the financial ability to meet his or her life needs and necessities following the dissolution of the marriage. Permanent alimony may be awarded following a marriage of long duration, following a marriage of moderate duration if such an award is appropriate upon consideration of certain factors (see (a) through (j) above), or following a marriage of short duration if there are exceptional circumstances. An award of permanent alimony terminates upon the death of either party or upon the remarriage of the party receiving alimony. An award may be modified or terminated based upon a substantial change in circumstances or upon the existence of a supportive relationship in accordance with Section 61.14.
- Lump Sum Alimony is used to give the receiving spouse a one-time payment.
- Durational Alimony is used to provide a party with economic assistance for a set period of time following a marriage of short or moderate duration. Durational alimony is awarded when permanent periodic alimony is inappropriate. An award of durational alimony terminates upon the death of either party or the remarriage of the receiving party. The amount of an award of durational alimony may be modified or terminated based upon a substantial change in circumstances. However, the length of an award of durational alimony may not be modified except under exceptional circumstances and may not exceed the length of the marriage.
Note – the IRS has its own rules for determining how much of an alimony payment is tax deductible. Your mediator will encourage you to talk to your accountant if there are any questions about the tax consequences of your alimony arrangement.
The principles in Section 61.29 of the Florida Statutes establish the public policy of the State of Florida in the creation of the child support guidelines. These principles are:
- Each parent has a fundamental obligation to support his or her minor or legally dependent child.
- The guidelines schedule is based on the parent’s combined net income estimated to have been allocated to the child as if the parents and children were living in an intact household.
- The guidelines encourage fair and efficient settlement of support issues between parents and minimizes the need for litigation.
Child support is calculated using a prescribed formula (outlined in Section 61.30 of the Florida Statutes). Your mediator will use this formula (which considers each parent’s net income and the projected number of overnights the children will stay with each parent) and the guidelines chart to calculate child support. In addition, your mediator will ask you to consider the additional economic needs of your children (things like clothing, school supplies, and gifts to others), the cost of your children’s health insurance, uninsured/unreimbursed medical dental costs for your children, and the cost of work related child-care. In order to correctly calculate child support you should remember the following:
- A parents’ net incomes is calculated by subtracting the amount the parent pays in (i) Federal, FICA and Medicare taxes; (ii) mandatory retirement contributions, (iii) mandatory union dues; (iv) health insurance coverage – for the parent only; (v) court ordered child support from prior cases; and (vi) alimony, from the parent’s gross income.
- If you have no income you may agree to an estimated income. Likewise, the court can give you (impute) an estimated income. And, the court may also impute income for perks, cash sales and/or tips. Section 61.30(2) of the Florida Statutes addresses imputed income for the purposes of calculating child support.
- The substantial shared parenting method is used when the child(ren) spend at least 20% (73 or more overnights per year) of their overnights with each parent. A parent’s failure to regularly exercise the court-ordered or agreed time-sharing schedule can result in the modification of a child support award. And, such a modification may be retroactive to the date that the “noncustodial” parent first failed to regularly exercise the court-ordered or agreed time-sharing schedule.
- The court may adjust or modify child support at any point in time. So as circumstances change either parent may return to court and request a modification of child support. The criteria the court uses to make this decision are outlined in Florida Statute 61.30(11).
- Child support terminates on a child’s 18th birthday, unless the parents agree otherwise.
The Florida State Disbursement Unit is the agency that provides the central address for collection and disbursement of child support payments. This agency is used for cases where child support is paid directly and cases where child support is paid through an income deduction order (IDO). (An IDO is a court order that orders the obligor/payor’s employer to pay child support on his/her behalf.)
In the Everything Else section you and your spouse may include anything else that you agree is relevant including how you will handle the dependency tax exemption for your children, legal expenses, the purchase of life insurance, guidelines for future communications, or visits with the family dog.